Have you decided to sell your business? Not sure how much your business is worth? Deciding to sell your business is a big step, don’t take it alone. Our brokers at Transworld Business Advisors of Houston will happily perform a business valuation report for your business. What does this mean? This means that our experts will look at a variety of contributing factors when it comes to what your business is worth.
There are several standards for valuation:
- Fair market value: The price at the point of sale that both the buyer and seller understand.
- Intrinsic value: Stock values that investors look at.
- Fair value: Legal standards for value.
- Investment value: A value held by specific buyers. May exceed fair market value.
Calculating each and every valuation standard can be tricky, seeing that each has its own set of intricate considerations. For example, if we were to look at fair market value, we would consider the following approaches:
- Asset Approach
This first approach looks at your business’s assets and does not look at liabilities. Methods used in this approach include book value, excess earnings and asset accumulation. This approach is not enough, however, as it concentrates on assets and doesn’t look at ongoing positive earnings and usually means very little to the market value of most businesses.
- The Market Approach
The market approach is straightforward; our advisors will look at the market and consider the prices of similar businesses and industries when developing the sale price your business will be listed at. This approach is a great indicator of value; however, we utilize all three to determine your business’s full potential.
- The Income Approach
Future income your business will bring in is another indicator of market potential and the last of our three approaches. Buying a business is an investment; this makes pricing a business for sale difficult without knowing the potential investment for the future owner.
This is just a simplification of the valuation process. There are so many other considerations including location, growth rates, size, competition, etc. If you are wondering why it is so important to know the value of your business in such detail and depth, the answer is that knowing the full potential of your business and the reality of its worth is vital in making the most of a sale.
Thankfully, you don’t have to do this alone. Contact the specialists at Transworld Business Advisors of Houston and find out how we can help you with learning the worth of your business today! Call us at (281) 769-4277.